Microsoft charges customers for free services

Scott dunn By Scott Dunn

Thousands of customers are paying almost $120 USD per year to Microsoft for an Internet subscription service that includes e-mail, security, and other features.

But Microsoft gives away almost identical services absolutely free in Windows Live and the Windows operating system itself, while neglecting to inform those who pay through the nose.

Free Windows Live eclipses MSN Premium

Microsoft’s for-pay service, known as MSN Premium, is a collection of broadband features that must be accessed through a special browser: MSN Explorer. Once downloaded and installed, this browser supports Web surfing, an interface for e-mail and calendar programs, and Microsoft’s online encyclopedia, Encarta Premium. Other features, such as an included digital image editor, are accessible by launching a separate application.

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MSN Premium is typically marketed by Internet service providers who are Microsoft’s partners, such as Qwest and Verizon in the U.S. and Bell Sympatico in Canada. (Qwest currently offers Windows Live instead of MSN.) Consumers can also purchase MSN Premium directly from Microsoft Online Services. The current version, according to the Microsoft site, is MSN Premium 9.5, which costs $9.95 per month in the United States.

According to page 11 of a PDF file on the Bell Sympatico site, more than 8.2 million people worldwide subscribe to MSN Premium. Microsoft does not release figures on how many of these users pay the monthly fee, and how many receive MSN Premium as part of a bundle from their ISPs.

The subscription service was first launched for broadband customers in 2004. Since then, however, Microsoft has released a new collection of Web services under the Windows Live brand, new versions of Internet Explorer, and service packs for Windows XP — all free — that duplicate the features that MSN Premium customers pay precious money for each month.

Microsoft’s FAQ page promotes MSN Premium as having 21 features. Yet nearly every one of the features is available from Microsoft for free — either through Windows Live or existing versions of Windows and Internet Explorer.

Table 1 lists these services and more, showing exactly where consumers who’ve been sold MSN Premium could obtain the same or comparable services from Microsoft for free.

Table 1. Nearly every MSN Premium feature is free in Windows Live or in Windows itself.

MSN Premium
($10/mo USD)

Windows Live

Included in Windows
(or free from Microsoft)

Parental controls
Windows Live Family Safety
Parental controls included in Vista
Phishing filter
Included in Live Hotmail
Included in IE 7
Outlook Connector
Includes Outlook Connector
Free download
Digital Image Standard 2006 Editor and Digital Image Standard Library
Windows Live Photo Gallery
Windows Photo Gallery included in Vista
MSN Mail
Windows Live Hotmail
Virus Guard from McAfee
Live OneCare scan
E-mail virus protection
Included in Live Hotmail
10 GB of mail storage
5 GB of mail storage
Junk e-mail guard
Included in Live Hotmail
Up to 10 additional member accounts
Create unlimited linked Live IDs
Multiple e-mail account support
Add multiple existing mail accounts in desktop version
Anytime, anywhere access to e-mail
Mail available from any browser, plus Mobile Mail for cell phone
Designer e-mail with photo albums
Included in desktop version of Live Hotmail
Alert reminders
Windows Live Alerts
Calendar included in Live Hotmail, Windows Live Calendar Beta
Encarta Premium
Windows Live Academic Search Beta
Virtual Earth
Live maps
TrueSwitch for transferring info from other e-mail accounts
Included in Live Hotmail
Free technical support
Windows Live Support
Firewall Included in XP SP2 and Vista
Webroot Spy Sweeper for MSN
Windows Defender is a free download for XP, included in Vista
Pop-up guard
Included in IE 6 and 7
Photo Story Lite
Photo Story 3 is a free download; Windows Movie Maker is included in XP, Vista
Messenger photo swap
Sending photos is part of Windows Messenger, included in XP; free download for Vista
Member center
Multiple Microsoft communities
Download manager

About the only MSN Premium feature that Microsoft doesn’t offer for free in some other form is the MSN download manager. But consumers can easily visit a site like Snapfiles, which lists several third-party equivalents at absolutely no cost.

Microsoft is running a similar “pay for what’s free” scheme in its Hotmail Plus service. According to Microsoft’s promotional page, Microsoft sells subscriptions to Hotmail Plus for $20 a year, promising junk e-mail filters and the ability to access e-mail via Microsoft Outlook. Similar features that are almost as generous are totally free in Microsoft’s Windows Live service.

To give credit where it’s due, Hotmail Plus does give its paying users more storage space (2GB), larger attachments (up to 20MB per message), and the elimination of ads, compared with the free version of Hotmail. MSN Premium, however, has few such advantages over the free services that paying subscribers never hear about from Microsoft.

Why is Microsoft competing with itself?

It’s not all that surprising to find a software company offering a free equivalent to a competitor’s commercial product. But Windows Live and MSN Premium are produced by the same company. What’s going on?

Although not addressing MSN Premium per se, Microsoft has repeatedly asserted, such as in press releases on Sept. 11, 2006, and May 6, 2007, that “MSN and Windows Live will be offered alongside each other as complementary services.”

Echoing this position, Windows Live general manager Brian Hall told a reporter at the ReadWriteWeb blog in June 2007 that the distinction between MSN and Live will become more apparent as Windows Live evolves.

Such fine points of product positioning may be lost on MSN Premium customers, who have a right to wonder why they’re paying for services that the same company offers for free.

In May 2007, as described in a Microsoft statement, the Redmond company forcibly migrated all MSN Hotmail customers to the newer Windows Live Hotmail. This would have been the ideal time for the company to inform MSN Premium’s paying customers that Microsoft was offering basically the same service for free.

To my knowledge, no such announcement has ever been made. On the contrary, when I recently signed up to pay $10 a month for MSN Premium as a test, I received no alerts or e-mails informing me that a newer, no-cost option was available.

Whether MSN Premium will eventually provide services superior to Windows Live only time will tell. At the moment, MSN Premium customers have every right to consider themselves cheated.

Have a tip about Windows? Readers receive a gift certificate for a book, CD, or DVD of their choice for sending tips we print. Send us your tips via the Windows Secrets contact page.

Scott Dunn is associate editor of the Windows Secrets Newsletter. He has been a contributing editor of PC World since 1992 and currently writes for the magazine’s Here’s How section.
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